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To support the HEFCE review of the Transparent Approach to Costing (TRAC), HEFCE commissioned KPMG to gather and evaluate evidence from across the range of groups and individuals with an interest in TRAC, and to provide analysis of the current TRAC arrangements.

The consultants found that most parties considered that a sector-wide activity-based costing system was important, and that TRAC remained the most viable system to meet the needs of higher education institutions (HEIs) in providing information to support them in costing their activities and managing their financial sustainability. However, in the light of the changing regulatory and funding environment, there remains a need to review the future of TRAC and identify proposals for streamlining the process.  

The study also found that there were:

  • a range of institutional benefits arising from the use of TRAC as a sector-wide activity-based costing approach, including meeting the needs of a wide range of stakeholders through a single system
  • an understanding of the importance of transparency and a recognition that additional information about the costs of providing higher education (HE) could be published, but also some concerns about the level of detail and whether such information would be useful (and for whom)
  • issues in respect of publication in a more competitive HE environment, and the concerns about the burdens of preparing, publishing and validating such information
  • evidence that the costs to HEIs in complying with TRAC requirements represent a relatively small proportion of overall expenditure, and that much of this would continue to be incurred by HEIs even if the TRAC requirements did not exist
  • perceptions about the burden associated with the TRAC requirements which may be influenced by the concerns about the wider burden of regulatory reporting for HEIs and their staff, of which TRAC is only a small part, and a lack of clarity about the purpose and uses of TRAC within institutions
  • opportunities to streamline the TRAC requirements to reduce burden and enhance the utility for HEIs.

The study has informed the development of the HEFCE consultation, ‘Review of TRAC: Consultation on streamlining requirements and increasing transparency of the Transparent Approach to Costing’.